The document provides an overview of accounting concepts and procedures across multiple chapters: - Chapter 1 defines the accounting equation and financial statements such as the income statement, balance sheet, and statement of cash flows. - Chapter 2 covers the double-entry system including T-accounts, the general journal, general ledger, and trial balance. - Chapter 3 discusses adjusting entries, including deferrals and accruals, and how the adjusted trial balance relates to the financial statements.

1. INCOME SUMMARY

2. CHAPTER 1: ACCOUNTING AS AN INFORMATION SYSTEM 1/ Accounting Equation 2/ Financial Statements

3. 1/ Accounting Equation Assets = Equities Assets= Liabilities + Owner’s Equity

4. 2. Financial Statement 1/ The Income Statement 2/ The Statement of Owner’s Equity 3/ The Balance Sheet 4/ The Statement of Cash Flow

9. (continued)

10. (concluded)

11. CHAPTER 2: THE DOUBLE-ENTRY S Y S T E M 1.The T Account 2. Procedure Of Rec. Transaction 3. The Journal, General Journal 4. Trial Balance

12. Assets Equity 1. The T Account

13. 1. The T Account (cont.) THE T ACC. ILLUSTRATED : Cash Account: O. Balance: $ 1,200 Jan, 05: Received $ 300 Jan, 07: Received $70 Jan, 10: Paid $700 Jan, 28: Received $130 700 Jan.10 300 Jan.05 70 Jan.07 130 Jan.28 700 500 1,000 Bal. 1,200 Bal. C A S H

14. 2. Procedure Of Rec. Transaction - Analyze the transactions - Journalizing - Posting to the ledger - Prepare Unadjusted trial balance

15. 3. – The Journal, General Journal 3.1 THE GENERAL JOURNAL 2,000 AC. Payable by on credit Purchase O.S 2,000 Office Supplies 6 2007 May … Credit Debit Post Ref. Description Date Page 1 General Journal

16. 3.2 The General Ledger Balance Cr. Item Ac. No. … Accounts Payable … … Dr. … 2,000 … 1,000 1,300 J2 7 … … … … … 2,300 J1 6 2007 May … … … … . … … Cr. Dr. Post Ref. Date General Ledger

17. Office supplies 2007 May 2,000 J1 √ 1 2 3 4 6 6 3,500 5 3.3 – Relationship between Journal and Ledger 2,000 AC. Payable on credit Purchase O.S by 2,000 Office supplies 6 2007 May … Credit Debit Post Ref. Description Date Page 1 General Journal Balance Cr. Item Ac. No. … … 1,500 Dr. … … … … … … … … … … … . … … Cr. Dr. Post Ref. Date General Ledger

18. Cash $ 2,000 4. Trial Balance 100 Telephone Expense ……………… ……………… ………………………… .. $ 2,500 Accounts Payable 1,400 AXY, Withdrawals 3,200 Fees Earned 10,000 AXY, Capital TRIAL BALANCE – May 31, 2007 Balance Cr. Item Ac. No. … Cash 2,000 1,500 Dr. … … … … … 31 … . May … … … . … . 2007 Cr. Dr. Post Ref. Date General Ledger

19. CHAPTER 3: BUSINESS INCOME – ADJUSTING ENTRIES 1 / The Adjustment Process 2/ The Adjusted Trial Balance

20. 1/ The Adjustment Process Deferrals 1.1 - Apportioning Recorded Expenses 1.2 - Apportioning Recorded Revenues Accruals 1.3 – Unrecorded Revenues 1.4 – Unrecorded Expenses

21. 1.1 – Apportioning Recorded Expenses * PREPAID EXPENSES Debit Insurance Expense Credit Prepaid Insurance * SUPPLIES EXPENSES ** Stock-taking Debit Supplies Expense Credit Supplies * DEPRECIATION EXPENSES ** Straight Method Debit Depreciation Expense Credit Accu. Depre., Equip.

22. 1.2 – Apportioning Recorded Revenues * UNEARNED FEES Debit Unearned Fees Credit Fees Earned

23. 1.3 – Unrecorded Revenues * UNRECORDED FEES Debit Fees Receivable Credit Fees Earned

24. 1.4 – Unrecorded Expenses * UNRECORDED EXPENSES Debit Office Wages Expense Credit Wages Payable

25. 2. – The Adjusted Trial Balance Posting of the adjusting entries to Ledger Preparing Trial Balance (Adjusted Trial Bal) Preparing Income Statement from Revenue Ac and Expense Ac Preparing Balance Sheet from Adj Trial Bal & Income Statement

26. Relationship of Adj Trial Balance to Income Statement … $ 9,000 John, Capital 900 Wages Expense 100 Utility Expense … 400 Rent Expense $18,810 $18,810 1,600 Art Fees Earned 3,000 Ad Fees Earned … . $1,200 Cash ADJUSTED TRIAL BALANCE 1,600 Art Fees Earned $4,600 Total Revenues Expenses $100 Utility Expense 900 Wages Expense 400 Rent Expense $1,400 Total Expenses $3,200 NET INCOME $3,000 Ad Fees Earned Revenues INCOME STATEMENT

27. Relationship of Ad Trial Balance to Balance Sheet $70 Acc. Depr, Off E 4,200 Office Equip. … $18,810 $18,810 … . $1,200 Cash ADJUSTED TRIAL BALANCE ASSETS $1,200 Cash . . . $4,200 Of. Equip 4,130 70 Less Accumulated Depreciation $14,500 Total Assets LIABILITIES … $3,900 Total Liabilities OWNER’S EQUITY $14,500 Total Lia. & OE 10,600 John, Capital, Jan 31, 07 BALANCE SHEET $600 … $10,600 John, Capital, Jan 31, 07 ___ John, Capital, Jan 1, 07 STATEMENT OF OE

28. CHAPTER 4: COMPLETING THE ACOUNTING CYCLE 1/ Prepare a WORK SHEET & FINANCIAL STATEMENTS 2/ Record CLOSING ENTRIES 3/ Prepare REVERSING ENTRIES

29. 1/ Prepare a WORK SHEET & FINANCIAL STATEMENTS Work Sheet

30. FINANCIAL STATEMENTS Revenues Expenses Work sheet Income statement Withdrawals Capital WORK SHEET + Net Income ➮ STATEMENT OF OWNER’S EQUITY INCOME STATEMENT Liabilities Assets WORK SHEET + Capital ➮ BALANCE SHEET STATEMENT OF OWNER’S EQUITY

31. Record CLOSING ENTRIES Dr. Revenues Cr. Income summary Dr. Income summary Cr. Expenses Dr. Net income Cr. Capital Dr. Capital Cr. Withdrawals

32. Prepare REVERSING ENTRIES (1) Accrued expenses ** Adjusting Entry Jan 31 Wages Expense $180. Wages Payable $180. ** Reversing Entry Feb. 1 Wages Payable $180. Wages Expense $180. Feb.9 Wages Expense $600. Cash $600. Feb 9 Wages payable $180 Wages expense $420 Cash $600

33. (2) Accrued revenues ** Adjusting Entry Jan 31 Fees Receivable $200. Advertising Fees Earned $200. ** Reversing Entry Feb. 1 Advertising Fees Earned $200. Fees Receivable $200. Feb.10 Accounts Receivable $300. Advertising Fees Earned $300. Feb.10 Accounts Receivable $300 Advertising Fees Earned $100 Fees Receivable $200

34. CHAPTER 5: ACCOUNTING for MERCHANDISING OPERATIONS 1/ Returns and allowances & Discounts 2/ Transportation Term 3/ Record Purchases of merchandising (GROSS & NET METHOD) 4/ Record CLOSING ENTRIES

35. 1/ Returns and allowances & Discounts Sales: Sales return and allowances Dr. Sales return and allowances Cr. Accounts receivable or Cash Sales discounts Jan 20 Dr. Accounts receivable $300 Cr. Sales $300 (terms 2/10, n/30) Jan 29 Dr. Cash $294 Dr. Sales discounts $6 Cr. Accounts receivable $300

36. Purchases: Purchases returns and allowances Dr. Accounts payable Cr. Purchases returns and allowances Purchases discounts Feb 2 Dr. Purchases $1,300 Cr. Accounts payable $1,300 (terms 2/10, n/30) Feb 10 Dr. Accounts receivable $1,300 Cr. Purchases discounts $26 Cr. Cash $1,274

37. 2 / Transportation Term

38. 3/ Record Purchases of merchandising (Gross Method) - AC Payable Cash Purchase (Gross Price) Purchase mer. for resale - AC Payable Cash Freight In Incur transportation on mer. Purchases Discounts Cash AC Payable Pay for mer. purchased on credit - AC Payable Purchase (Gross Price) Cash Return mer. or obtain a reduction Credit Debit Transaction

39. 4/ Record Purchases of merchandising (Net Method) Cash AC Payable Pay for mer. purchased on credit - Purchases Discounts Lost Purchase (Net Price) Cash Return mer. or obtain a reduction - AC Payable - AC Payable Cash Purchase (Net Price) Purchase mer. for resale - AC Payable Cash Freight In Incur transport. on mer. Credit Debit Transaction

40. 4/ Record CLOSING ENTRIES Income Summary Expenses Merchandise Inventory (Begin) Sales Return & Allowances Sales Discounts Purchases Freight In Merchandise Inventory (End) Sales Purchases Return&Allowances Purchases Discounts Income Summary

41. 5/ Calculate COST OF GOODS SOLD GOODS Available for Sale Beginning Merchandise Inventory NET PURCHASES COST OF GOODS SOLD ** Cost of Goods Sold: Ending Merchandise Inventory

42. 6/ Income Statement Total Operating Expenses Operating Expenses Selling Expenses General & Administrative Expenses Net Income Gross Margin from Sales Cost of Goods Sold Cost of Goods Sold Net Sales Revenues from Sales INCOME STATEMENT For the Year Ended …..

44. CHAPTER 6: ACCOUNTING SYSTEMS SPECIAL-PURPOSE JOURNALS Special-Purpose Journal Save times Compare

45. 2.1/ Relations between transactions and special-purpose journals CP C ash P ayments Journal Disbursements of cash CR C ash R eceipts Journal Receipts of cash P P urchases J Purchases on credit S S ales Journal Sales of mer on credit Abbre S-P Journal Transaction

46. 2.2 / Sales Journal - Only one line to record each transaction No explanation 4,950./ . . . . . . . . . . . . . . . . . 335./ 724 Peter Clark 8 500./ 722 Michael Powers 5 750./ 721 Peter Clark 1 July Dr AC Receivable Cr Sales PostRef. Invoice Number AC Debited Date SALES JOURNAL

47. 4,950./ . . . . . . . . . . . . . . . . . 335./ 724 Peter Clark 8 500./ 722 Michael Powers 5 750./ 721 Peter Clark 1 Jul Dr AC Receivable Cr Sales PostRef. Invoice Number AC Debited Date SALES JOURNAL Page 1 4,950. 4,950 S1 31 Jul Cr Dr Balance Cr Dr Post. Ref. Date AC Receivable …… 4,950. 4,950 S1 31 Jul Cr Dr Balance Cr Dr Post. Ref. Date ……… . Sales

48. End of the month Daily 4,950./ . . . . . . . . . . . . . . . . . 335./ 724 Peter Clark 8 500./ 722 Michael Powers 5 750./ 721 Peter Clark 1 Jul Dr AC Receivable Cr Sales PostRef. Invoice Number AC Debited Date SALES JOURNAL Page 1 500. 500. S1 05 Jul Cr Dr Balance Cr Dr Post. Ref. Date Michael Powers …… 750. 750. S1 01 1,085. 335. S1 08 Jul Cr Dr Balance Cr Dr Post. Ref. Date Peter Clark …… 4,950. 4,950 S1 31 Jul Cr Dr Balance Cr Dr Post. Ref. Date AC Receivable ……

49. 500 750 C ash R eceipts Journal Page 1 2,600 1,250 10 3,840 1,400 1,400 sales 13 750 750 Peter Clark 16 500 10 490 Georgetta Jones 8 1,200 1,200 sales 1 Jul Other accounts Sales Accounts Receivable Other Accounts Sales discounts Cash Credits Debits Post. Ref. Account Debited/ Credited Date 500 CR1 08 Jul Cr Dr Balance Cr Dr Post. Ref. Date Georgetta Jones …… 100 CR1 16 Jul … .. 850 … .. … .. … . … … . Cr Dr Balance Cr Dr Post. Ref. Date Peter Clark …… 3,840 3,840 CR1 31 Jul Cr Dr Balance Cr Dr Post. Ref. Date Cash …… 850 S1 31 Jul 400 1,250 CR1 31 Cr Dr Balance Cr Dr Post.Ref. Date ……… . AC Receivable

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